Chinese outward real estate investment skyrockets

Chinese outward real estate investment skyrocketsThe total value of Chinese global real estate investment skyrocketed from $0.77 billion in 2009 to $21.6 billion in 2014, finds Knight Frank’s latest report, Chinese Outward Real Estate Investment.Softening Chinese market conditions and government policy that encourages overseas investment by Chinese firms has led to increasing investment levels in gateway markets, particularly Australia.The report finds that Australia has recorded extraordinary growth in investment, with just over $4 billion invested by Chinese investors in 2014 across both commercial and development sites. This has exceeded combined investment from the previous five years.Knight Frank expects 2015 will be another record year, both internationally and in Australia, with more than US$25.5 billion worth of investments to be transacted globally. “What first started as sovereign funds making exploratory investments has proliferated into buying sprees by Chinese developers, banks, ultra high net worth individuals and institutional investors, such as insurance companies,” says Knight Frank’s senior director of Asian markets, Dominic Ong.”This current wave of equity investors and insurance firms are seeking core, value-add and yield-driven opportunities. Amongst the big-cap players, only four of the top 10 Chinese insurance companies have made offshore investments so far, although the remaining six are considering overseas expansion.”Sunshine Insurance Group is the only one to invest in Australia, purchasing the Sheraton on the Park Hotel in Sydney for a record $463 million. Knight Frank expects other Chinese insurance companies will be active on Australian listings in 2015.Sydney and Melbourne have been the most attractive markets, although Ong says the next wave of Chinese investors are diversifying into Brisbane, Adelaide, the Gold Coast, Perth and metropolitan suburbs in NSW and Victoria.According to Knight Frank’s group director of research, Matt Whitby, Australian cities are attracting significant investment, relative to the size of their economies. “The economies of London and New York are much larger than the combined economies of Sydney and Melbourne, however they were outpaced in 2014 as a place to invest for the Chinese.”